NITL's suggestions to STB for rail policy oversight

[MP173]

Just read the 46 page NITL report. Pretty interesting reading. Seriously, I would suggest many of you to read it.

A few points NITL made:
1. Railroad's ROI (return on investment) is currently only 70% of the cost of capital...about 7% ROI vs 10% coc.

2. That ratio (70%) has risen over the past 25 years of Staggers.

3. NS and possibly BNSF will pass the coc this year.

4. Car ownership is now over 50% of the entire fleet, dramitically higher than 25 years ago.

5. Though intermodal was long believed to be carried at rates just above incremental costs, recent anecdotal evidence suggest pricing has moved up significantly. (note: I pretty much quoted this from teh report)

6. Changes in teh trucking industry have increased rail's ability to exercize market power.

7. Lack of capacity has shifted marketing philosopy from incremental to full cost recovery...something not done in the past 50 years.

NITL was very positive in the effects of Staggers. They admit the capacity issue will be very real and very critical to the growth of the economy.

In direct opposition to what Dave has indicated, NITL says that rails now have pricing power on the imported intermodal movements and are experiencing healthy profits on such traffic. Thus, good news! The subsidies to Asia has come to a close.

NITL is very concerned over rail's movement from contract rates to published rates...and obviously so. They have lost control over confidentiality and over stability of rates. That will be a concern as published rates can easily be raised (or lowered) while contract rates are stabilized thru the duration of the contract.

Interesting report.

Dave...direct me to the CURE website please. I ended up at some band's website....dont think they ship their amps, drums, and guitars by rail!

ed

[Murphy Siding]

QUOTE: Originally posted by futuremodal


Murphy: Since you yourself don't bother to go to the sources I cite, then the joke"s on you. As such, I will offer to you a little taste of "murphyism": Murphy, shame on you, tsk tsk tsk, etc. etc. etc. [:D][V][:P][*^_^*]

Now that's funny [(-D]

[oltmannd]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by futuremodal

And in global terms, U.S. producers have acrued a net loss in rail rates compared to overseas producers since the passage of Staggers. That's the hard cold fact you have to contemplate.

Prove it with data.

On average, the four largest U.S. railroads—the BNSF, CSX, Norfolk Southern, and Union Pacific—charged captives rates averaging 237% above their variable costs, while competitive rates average 108% of variable costs. (Revenue adaquacy is determined to be rates that run about 180% above variable costs).

source: STB - 2001 Revenue Shortfall Allocation Methodology Study

From the following, you can clearly see that captive rates for domestic intermodal are over twice the rates for intermodal import rates:

Average revenue/ton mile for intermodal, captive vs non captive -
CSX - $54.11 captive, $26.18 non captive
NS - $45.42 captive, $20.85 non captive
BNSF - $115.70 captive, $48.88 non captive
UP - $91.42 captive, $40.60 non captive
source: Rail Price Advisory, First Quarter 2003, Vol 12, No. 1


"If railroads don't work with their customers to find a solution, continued economic pressure could end up pushing captive shippers out of the country. It's no secret that manufacturing costs are lower overseas, and for captive shippers, it sometimes is cheaper to ship internationally than it is to move product domestically."

Testimony of Roger Nober, as quoted in Logistics Management, November 1 2003.


Now, if you think you have data that shows the opposite, provide it.

"Prove it with data" - source: Bob Wilcox, TRAINS forum, October 29, 2003

What in the world is "captive intermodal"? Lanes where either the orgn or dest city only have one ramp? That's just silly. It's like me being "captive" to Kroger because I'd have to drive 10 miles to get to a Publix!

No doubt those "variable costs" quoted are aggregate for the whole RR - which are meaningless when you're talking specific service in specific lanes. The STB does not have access to that level of detail.

What do you think about capital markets funding OA. If it's a win-win, they'll show up with the $$ to do it.

[MP173]

Ok, fair enough. I have not read every post of yours over the years, so I am not aware of your career. Thanks for filling me in.

I asked a simple definition to define captive vs non captive intermodal traffic. I seriously doubt if noncaptive intermodal traffic exists, based on the basics of intermodal. Perhaps I will try and find this.

You list no companies which have moved their operations due to high transportation costs. I seriously doubt if transportation costs from Asia can be less than intercity costs here, but I will keep an open mind to it. I think other factors are in play here, mainly the differential in labor rates. I too worry about that going forward, for my son's future. But my concern is the differences in labor costs as I feel that is the major factor.

Of course my statement of lower rates for captive shippers/forced traffic to railroads was ridiculous...it was meant to be and I even admitted it.

Perhaps you should look at your own energy industry for lessons on captivity. Last time I heard, profits for Exxon Mobile, etc were record high. Disclaimer here...I am both an owner of Exxon Mobile stock and an owner of producing oil wells, so my attitude towards these captive record profits is a bit different from most folks.

I stand by my previous statements of the NITL and other large corporations not wanting to invest in the transportation infrastructure and simply consume other's capital.

Remove anti-trust immunity...sure go ahead, there goes the joint line rates and switching agreements and many other economic factors.

My source which you questioned was the STB, thru Richard Saunder's book.

ed

[Anonymous]

Ed: As to what I do, and what I've done in the past, I have anwered that before. I have been involved in various acpects of transportation as it relates to grocery and retail pertroleum distribution. I have worked for the USDA as an ag interviewer, and am now working for an energy company. That being said, it is completely irrelevant to the topic at hand, because the subject matter is one being played out by the players involved, and I am just relaying some of that information and providing my own comments and opinions on the matter(s). My concern lies from the perspective of being an average American, concerned about the ability of U.S. companies to compete on the global stage. You do not have to be employed by or own stock in such companies to know that you may still feel the effects of their downfall, should that occur.

If you want information on companies that have shut down or left the country, or who have had some other negative effects due to rail captivity, I would suggest you contact the NITL, CURE, or any other such shipper organizations. Since you don't believe me, maybe you'll believe it if it comes straight from those effected. Of course, I get my info from them, so you'll just be getting redundant information.

None of your sources you cite would even bother to take the time to differentiate between captive and non captive shippers, and there's the rub. They are part of the pro-rail lobby, and as such to diseminate such information would be counterproductive to their own lobbying efforts. And BTW, I also have taken the time to get their POV as well, unlike you.

And for a "definition of the definition of 'average revenue per ton/mile intermodal, captive v noncaptive' ", I gave the source (the Rail Price Advisory). Feel free to look it up. You can access that information from the source's I provided. Go to the CURE website.

Your statement "If railroads were forced to lower rates for captive shippers, then under you reasoning would they be forced to provide all of their traffic to railroads?" is non sensical to me, and as such I take it to be some attempt at analogy for the purpose of illistrating your counterargument. Under regulation, rates were more equalized between captive and non captive shippers, but no one was "forced" to provide all their traffic to the railroads in return. Perhaps you are suggesting some kind of tit for tat actions should some form of rail reregulation occur. It's a non sequitur, because if they are rail shippers, they're going to ship by rail anyway if such rates come down. They will only ship by truck for the same reason they are forced to do so now - trucking is the mode of last resort, and is only used for those shipments the railroads either can't or won't handle as part of the logical supply chain.

Of course, if your memory served you better, you would recall that I am for a market based reduction in rail rates via the introduction of competitive rail services to all rail shippers. How that will happen is still being played out, but the logical approach is to eliminate the anti-trust exemption railroads have enjoyed, then shippers will be allowed to use the courts to empower a solution to that anachronistic problem of the "natural monopoly" of railroading in North America. So you see, there is no need for your Orwellian "controlled economy" scenario to accompli***his feat, since anti-trust is an apt adjunct of the free market system.

Bob: I do not know Terry Whiteside personally, but I have had email correspondences with his office in the past. He is one of the leading voices for addressing the nationally counterproductive railroad rate discrimination. Last I heard he was working out of Billings MT. Why do you bring him up?

Murphy: Since you yourself don't bother to go to the sources I cite, then the joke"s on you. As such, I will offer to you a little taste of "murphyism": Murphy, shame on you, tsk tsk tsk, etc. etc. etc. [:D][V][:P][*^_^*]

[MP173]

Murphy:

You know as a fellow salesman, all of the factors involved in pricing.

Dave: please define for me the definition of "average revenue per ton/mile intermodal, captive v noncaptive."

I am having a difficult time visualizing what that might be. Why? By definition, wouldnt intermodal be "noncaptive"? Choices exist.

Another thing...I am not making a serious mistake, as you state. I am simply quoting from a book, which comes from a very reliable source.

I notice that you do not even address the subject of shippers investing their own capital to reduce their transportation costs. We both know why that wont happen. The return on investment threshold will not allow it to happen. It wont even make it to the board room for consideration.

I am not sure where you are going with this. Are you wanting regulation?

Please give me examples of specific companies or industries which have left the US due to transporation costs only. If railroads were forced to lower rates for captive shippers, then under you reasoning would they be forced to provide all of their traffic to railroads? Heck no...that is rediculous. Yet, that is your reasoning. Why? Because the railroads must be required to lower their rates in order to insure that jobs will remain. Therefore, under the same scenario, the shipper would be required to tender all traffic to railroads to insure jobs would be secure. Not a pleasant thought, that of controlled economy is it?

Or controlled life, something that has failed.

One of the smartest things I have seen was at the Gilman, Il. A new soybean processing plant went into business about 10 years ago. It was located so that both the IC (now CN) and the TPW would have access to the plant. Smart move.
If transportion costs are going to be a critical component of your cost structure, dont box yourself in. Always have options.

ed

[bobwilcox]

Dave-Do you know Terry Whiteside?

[Murphy Siding]

QUOTE: Originally posted by MP173

I

Now, for a simple question. Dave, have you ever sold for a living or been involved in the developement and or marketing of a product or service...anything? Not a trick question, nor am I demeaning you. Just trying to get an idea of your mindset. Actually, it would be interesting to know how many of you do actually sell or market. I know some of you are involved in that function, some in the railroad industry.


ed

ed: This question has come up before. Dave's non-answer tells us the real answer is no. This leads me to view most of his posts as based on *theory*,proven and unproven. While I respect that he puts a little (or a lot ) of thought into some of these theory-based posts, I'll be the first to admit that I must laugh out loud at times.[(-D] To be fair, I'm sure Dave can say the same about some of my posts.[:)]

[Junctionfan]

Hi FM,

Been finnishing off my mid-terms; non stop exams lately..........

Back to the topic,

I always believed including now that at least for Canada, it would be advisable to hammer out a deal with CN and CP with the shippers and trucking companies, to maximise rail use as much as possible to reduce highway maintainence and upgrade costs, reduce healthcare costs from accumulative air pollution and accidents and welfare plus unemployment subsidies related to increase car accidents, reduce insurance premium rates (hopefully), and a few other indirect but important costs that is a result of increased highway use.

As CN and CP can't just up and double track and increase overall operation capacity at a whim, the government (me) would help out so also increased commuter and VIA Rail service could come into play without screwing up those railroads current or future operations.

It is a little costly but in theory (need to actually look at the facts and figures before proposing such a potentially contraversial plan), it should save Canadian taxpayers tons of money plus it should make CN and CP more money.

[Anonymous]

Junctionfan - Haven't seen you around for awhile.

To answer your question, if the government did as you suggest and subsidize parts of the railroads' cost structure without getting some kind of competitive concession from the railroads, what incentive would they have to lower rates? They would just take the added profits and (pardon me as I am *suffering* from a cold) forward those profits to their (insert fake cough oration "Red!", insert fake sneezing oration "Chinese!") stockholders.[V]

[Junctionfan]

Just an innocent question out of pure curiosity,

If the railroads could get some kind of subsidy for fuel costs and for capacity increases and some kind of assistance aquiring land to increase yard/ terminal (crew change) space, would that decrease the railroad's need to increase fees of customers? What kind of a case would the government make that would convince the taxpayer that this is what the country needs to you figure? Is it a direction that might be required or at the very least, something to be seriously considered?

(O.k that is more than one question..........[:-^])

[Anonymous]

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by futuremodal

And in global terms, U.S. producers have acrued a net loss in rail rates compared to overseas producers since the passage of Staggers. That's the hard cold fact you have to contemplate.

Prove it with data.

On average, the four largest U.S. railroads—the BNSF, CSX, Norfolk Southern, and Union Pacific—charged captives rates averaging 237% above their variable costs, while competitive rates average 108% of variable costs. (Revenue adaquacy is determined to be rates that run about 180% above variable costs).

source: STB - 2001 Revenue Shortfall Allocation Methodology Study

From the following, you can clearly see that captive rates for domestic intermodal are over twice the rates for intermodal import rates:

Average revenue/ton for intermodal, captive vs non captive -
CSX - $54.11 captive, $26.18 non captive
NS - $45.42 captive, $20.85 non captive
BNSF - $115.70 captive, $48.88 non captive
UP - $91.42 captive, $40.60 non captive
source: Rail Price Advisory, First Quarter 2003, Vol 12, No. 1


"If railroads don't work with their customers to find a solution, continued economic pressure could end up pushing captive shippers out of the country. It's no secret that manufacturing costs are lower overseas, and for captive shippers, it sometimes is cheaper to ship internationally than it is to move product domestically."

Testimony of Roger Nober, as quoted in Logistics Management, November 1 2003.


Now, if you think you have data that shows the opposite, provide it.

"Prove it with data" - source: Bob Wilcox, TRAINS forum, October 29, 2003

[bobwilcox]

QUOTE: Originally posted by futuremodal

And in global terms, U.S. producers have acrued a net loss in rail rates compared to overseas producers since the passage of Staggers. That's the hard cold fact you have to contemplate.

Prove it with data.

[Anonymous]

Ed,

You're making a huge mistake in taking "general" inflation-adjusted rail rates and assuming that 45% reduction applies to both captive shippers and non-captive shippers. I have no doubt the rates for importers have fallen in real terms more than 45%. What you need to find out is not the "real" rates for captive shippers (which I doubt have gone down 45%), but the COMPARATIVE rates of captive shippers to non-captive shippers. Say that hypothetically the inflation adjusted rates for captive shippers have actually gone down 25%. The railroads say "See, your rates are going down, you have nothing to complain about." The captive shipper replies "So what if my rates have gone down 25%, the rates for my competitors have gone down twice that much. It does me no good to get a rate reduction if the rates of my competitors have gone down twice as much, because now they have increased their advantage over me, and as such I am in a worse place than before when I was paying higher real rates."

In other words, you're focussing on the wrong numbers. The real numbers to be concerned about is that captive shippers (e.g. domestic producers) are paying rates as high as 235%* of the railroad's variable costs, while non-captive shippers (e.g. Chinese importers) are paying rates that are about 106% of the railroad's variable costs.

*(I'm going by memory here, so the 235% number may vary)

If you are a shipper, it does you absolutely no good to get a token discount if your competitor is getting a huge discount. Compared to your competitor, you have actually accrued a net loss in relative terms. And in global terms, U.S. producers have acrued a net loss in rail rates compared to overseas producers since the passage of Staggers. That's the hard cold fact you have to contemplate.

[MP173]

I have stayed out of this discussion, not because it doesnt interest me (as an "economic railfan" it is quite fascinating), but because I didnt think I had anything to add.

I had a serious case of "cant go back to sleep" at 430am this morning and decided to get up and read. I finished Main Lines by Richard Saunders...second time I have read it. Very good book. I highly recommend it.

Well, on page 353 Saunders points out that between 1984 and 1999 rail rates had fallen 45.3%, adjusted for inflation. The book was published in 2002. It would be interesting to know what has happened since then. No doubt the rates have increased.

Now, for a simple question. Dave, have you ever sold for a living or been involved in the developement and or marketing of a product or service...anything? Not a trick question, nor am I demeaning you. Just trying to get an idea of your mindset. Actually, it would be interesting to know how many of you do actually sell or market. I know some of you are involved in that function, some in the railroad industry.

Before this current position (15 years), I sold transportation service. I understand the mentality of shippers, particularly large shippers. They do not like to negotiate, they basically offer their business at a price they want to pay. That price usually drops each year. That is their mentality. To them transportation is a commodity. Their success as managers is based on delivery (service) and cost, with cost being the most important factor in determining their worth.

The absolute best method of negotiating a favorable outcome is to have a position of strength...no big earthshaking news there folks! Railroads are not going to give up any position of strength at this point in the game. Margins are low, based on comparisons to other industries, but are improving. Productivity is at the highest level in history.

Shippers always have options. What they dont have are cheap options. Coal prices too high...build nuclear. Chemical plant only have access to one rail line? Relocate adjacent to a junction of two lines, with access to both. Grain rates too high to support a prairie lifestyle? Build a bakery or ethanol plant near the grain and add value to the commodity.

But, those investments all require large amounts of capital...and it so much easier to utilize the railroad's capital, particularly if it is being rewarded below the Return on Invested Capital. It is all a game between players with LOTS of cash and invested capital.

Dave, I dont think this economy is losing jobs because the railroads rates dropped 45.3% in real dollars. There are far more factors involved than to make a blanket statement.

And if you really think that running trains on another carrier's lines is all that easy, then let me turn you to a wonderful internet column called Latta Laments, which is about the life of a CP dispatcher in Southern Indiana (south of Terre Haute). To the north his trains must travel the CSX, UP, and IHB lines to reach the Bensenville terminal. To the south CSX controls the Louisville access. Granted these were written in 1998/1999, but the lessons are very clear. Running trains on other people's lines are very difficult.

I dont have answers to economic issues that face the industry or the nation. It is plenty to manage my own economic interests. After reading Saunders excellent history of the last 30+ years, it is very obvious that regulation nearly nationalized a complete industry and that the freedom to actually market a business and run it has allowed the rail industry to at least get back on it's feet.

ed

[Anonymous]

Well, it comes down to what really defines "deregulation", so you guys are just going to love my next post.....[;)]

[Anonymous]

QUOTE: Originally posted by oltmannd

If OA is the solution, let the capital markets fund it - one way or another. No need to get the gov't involved.

If it is an overall better way, then there will be money enough to go around to all the stakeholders, no?

Makes sense. Give the RRs the full value of their property in a buy out if you think OA will work. Let FM put his money where his mouth is...

Of course, no customer really WANTS to run a railroad. AND no investor wants to invest in the uncertainty of a totally new business model where the existing one works fine...So, it won't ever happen...

LC

[oltmannd]

If OA is the solution, let the capital markets fund it - one way or another. No need to get the gov't involved.

If it is an overall better way, then there will be money enough to go around to all the stakeholders, no?

[Anonymous]

QUOTE: Originally posted by CSSHEGEWISCH

I'm sure that I'm not the only one with this point of view but I find it a little hard to swallow that the industrial decline of the United States can be reversed by open access and the elimination of differential pricing.

OA wouldn't reverse an industrial decline by itself, but it would go a long way toward ameliorating the global competitiveness of U.S. industries and producers. We would also need some regulatory relief so that U.S. industries can have new capital investments fast tracked to match market evolutions rather than having to wait a decade for environmental lawsuits et al can be rebuffed. It would be quite simple for regulators to allow template designs for new capital investments to be utilized rather than having to write a new EIS every single time they want to expand a facility or build a new one.

[CSSHEGEWISCH]

I'm sure that I'm not the only one with this point of view but I find it a little hard to swallow that the industrial decline of the United States can be reversed by open access and the elimination of differential pricing.

[oltmannd]

Since when does differential or yield pricing = a subsidy?

Ain't no such thing as a captive shipper - not in the last 50 years, anyway.

There are shippers that only have access to one RR (which is true for the vast majority of carload shippers). But, everyplace has access to highways, some places waterways, too. And capital markets will see to it that other viable alternatives will be funded if the return is there.

Farm, energy and steel subsidies do not effect how much stuff is produced. RRs are just one way of moving stuff from producer to consumer. If stuff is procuded in a different location, then it still has to be transported and the RR will move it when they are the best value for the move.

[Anonymous]

QUOTE: Originally posted by futuremodal

oltmannd,

Try this: Take the three valid points you made, and parse them between the rates RR's charge for imported goods and those charged for exported goods (leaving out domestic goods for the moment). What we have is the RR's charging much higher rates to captive U.S. shippers, and using those profits to effectively subsidize the importation of goods from overseas.

What is happening is just as you laid out, except that instead of the "industry moving out", we the taxpayers are keeping these domestic industries alive via subsidies, et al. Look at farm subsidies, and ask yourself the following: If the roles were reversed and we had the RR's charging domestic producers the cutthroat rates while charging importers the captive rates, would we even need to subsidize our farmers? The farm bill is nothing more than an indirect subsidy of the railroads, in that it keeps those farmers alive enough to keep producing the crops that the railroads need to haul (at exorbinate rates) to pay for the upkeep of the import corridors. Same goes for the new energy bill, as it aids in the development of coal which is probably the leading lifeline for the railroads.

Now try this hypothesis: Take away the farm subsidies, take away the energy industry subsidies, take away the steel tariffs, take away the pension bailouts, et al, and what do you think will happen to the railroads? How will they be able to raise import rates in the face of open competition at nearly every import facility, now that the bulk of their revenue sources have dried up?

Our domestic producers have enough trouble competing with protectionism of other countries, obscene environmental regulations, overzealous SEC oversight, etc. The one thing that can be done is to give them a break on the domestic transportation side.

If the skewed transportation market wasn't that much of an impact on the future prospects of domestic producers, they probably wouldn't have bothered to form a coalition to address these inequities in the first place. Yes, transportation rate gouging is a big issue!

Typical. A new low. Since we can't screw anybody else, lets screw the railroads...

Nice FM, real nice...glad to see you brought your real position to light...

LC

[Anonymous]

oltmannd,

Try this: Take the three valid points you made, and parse them between the rates RR's charge for imported goods and those charged for exported goods (leaving out domestic goods for the moment). What we have is the RR's charging much higher rates to captive U.S. shippers, and using those profits to effectively subsidize the importation of goods from overseas.

What is happening is just as you laid out, except that instead of the "industry moving out", we the taxpayers are keeping these domestic industries alive via subsidies, et al. Look at farm subsidies, and ask yourself the following: If the roles were reversed and we had the RR's charging domestic producers the cutthroat rates while charging importers the captive rates, would we even need to subsidize our farmers? The farm bill is nothing more than an indirect subsidy of the railroads, in that it keeps those farmers alive enough to keep producing the crops that the railroads need to haul (at exorbinate rates) to pay for the upkeep of the import corridors. Same goes for the new energy bill, as it aids in the development of coal which is probably the leading lifeline for the railroads.

Now try this hypothesis: Take away the farm subsidies, take away the energy industry subsidies, take away the steel tariffs, take away the pension bailouts, et al, and what do you think will happen to the railroads? How will they be able to raise import rates in the face of open competition at nearly every import facility, now that the bulk of their revenue sources have dried up?

Our domestic producers have enough trouble competing with protectionism of other countries, obscene environmental regulations, overzealous SEC oversight, etc. The one thing that can be done is to give them a break on the domestic transportation side.

If the skewed transportation market wasn't that much of an impact on the future prospects of domestic producers, they probably wouldn't have bothered to form a coalition to address these inequities in the first place. Yes, transportation rate gouging is a big issue!

[Anonymous]

QUOTE: Originally posted by futuremodal

They are also people like Con-Agra, Columbia Grain, GM, Ford, GE, Catapillar, Weyerhouser, LP, Arch Coal, Peabody, Potlatch, Golden Northwest, Seneca, Simplot, Westmorland, Maytag, Nucor, U.S. Steel, et al, et al, et al, who though they may have facilities overseas still have the meat of their production here in the U.S. at least for the time being.

As a nation we need to decide if we want to continue to be an industrialized nation, or if we should just throw in the towell and become a service oriented economy, a glorified banana republic. If it is the former, we need to address the blatant inequalities (export and domestic vs imports) when it comes to surface transportation of bulk commodities. If it is the former, let's all collectively hold our breath waiting for the next dot.com boom to provide us with empoyment and a tax base.

FOFLMAO...

You mean Caterpillar?? Weyerhauser??

Doesn't the market have some say? Or perhaps we should just install bristling barriers of customs tariffs and rules like Europe?

Newsflash. The economy is doing as well as it is now for ONE reason. China and the rise of Asia. If they stop buying T-Bills with the money we spend on their stuff the Depression resulting will make the 1930s look like a summer's day at the beach...

LC

[oltmannd]

QUOTE: Originally posted by futuremodal

They are also people like Con-Agra, Columbia Grain, GM, Ford, GE, Catapillar, Weyerhouser, LP, Arch Coal, Peabody, Potlatch, Golden Northwest, Seneca, Simplot, Westmorland, Maytag, Nucor, U.S. Steel, et al, et al, et al, who though they may have facilities overseas still have the meat of their production here in the U.S. at least for the time being.

As a nation we need to decide if we want to continue to be an industrialized nation, or if we should just throw in the towell and become a service oriented economy, a glorified banana republic. If it is the former, we need to address the blatant inequalities (export and domestic vs imports) when it comes to surface transportation of bulk commodities. If it is the former, let's all collectively hold our breath waiting for the next dot.com boom to provide us with empoyment and a tax base.

In an industrializing global economy, a country doesn't get to "decide" to be industrial or not. Economics do that - unless you prefer the North Korean economic model.....

If you beleive the status quo is untennable in the long run, then there exists only possible outcome, but three paths to get there:

1. If RR pricing is pretadory, then the industry can't compete and will move out and the RR will have no traffic and go belly up.

2. If industry extorts low rates from the RR, then the RR will go belly up and the industry will move out.

3. If RR pricing is fair, but still too high to sustain the industry, then the industry will move out and the RR will go belly up.

The only winning situation is if RRs can sustain profits, on the whole, that are high enough to generate enough capital to keep going AND those rates are low enough to allow industry to be competitive. It's not a sure thing that right now there is an intesection between those two contraints. To do ANYTHING that would reduce RR profits at this point would GUARANTEE no intersection.

The choice is between RRs having a chance or no chance at all.

[bobwilcox]

QUOTE: Originally posted by futuremodal

They are also people like Con-Agra, Columbia Grain, GM, Ford, GE, Catapillar, Weyerhouser, LP, Arch Coal, Peabody, Potlatch, Golden Northwest, Seneca, Simplot, Westmorland, Maytag, Nucor, U.S. Steel, et al, et al, et al, who though they may have facilities overseas still have the meat of their production here in the U.S. at least for the time being.

As a nation we need to decide if we want to continue to be an industrialized nation, or if we should just throw in the towell and become a service oriented economy, a glorified banana republic. If it is the former, we need to address the blatant inequalities (export and domestic vs imports) when it comes to surface transportation of bulk commodities. If it is the former, let's all collectively hold our breath waiting for the next dot.com boom to provide us with empoyment and a tax base.

I live in a county with no manufacturing since Con Agra closed their plant and source the products from Mexico. The unemployment rate is 1.3% and the median family income is $65,000 per year. We can stand a lot more of this.

[CSSHEGEWISCH]

As mentioned in other postings, transportation costs are a very small part of the trade imbalance. More important factors are the much lower costs of production overseas, the perceived lack of quality of American products (Japanese v. American autos) and the willingness of financiers to invest heavily in overseas development.

Shippers will always gripe about rates and/or service.

[Anonymous]

They are also people like Con-Agra, Columbia Grain, GM, Ford, GE, Catapillar, Weyerhouser, LP, Arch Coal, Peabody, Potlatch, Golden Northwest, Seneca, Simplot, Westmorland, Maytag, Nucor, U.S. Steel, et al, et al, et al, who though they may have facilities overseas still have the meat of their production here in the U.S. at least for the time being.

As a nation we need to decide if we want to continue to be an industrialized nation, or if we should just throw in the towell and become a service oriented economy, a glorified banana republic. If it is the former, we need to address the blatant inequalities (export and domestic vs imports) when it comes to surface transportation of bulk commodities. If it is the former, let's all collectively hold our breath waiting for the next dot.com boom to provide us with empoyment and a tax base.

[bobwilcox]

QUOTE: Originally posted by futuremodal
They charge captive shipper rates to our domestic producers while charging overseas importers cut throat rates

These are people like Dow Chemical, DuPont, Exxon, Shell and BP who have chemical plants all over the world. When Dow, throught the NIT League, talks about competing with foreign producers they are talking about competing withthemselves.

[Anonymous]

QUOTE: Originally posted by futuremodal

http://www.logisticstoday.com/displayStory.asp?nID=7515

Seems the National Industrial Transportation League's solution to the captive shipper/differential pricing problem is to revert to a form of rate regulation via certain caveats in the Stagger's Act. I told you this would happen, abuses by the Class I's (percieved or otherwise) will always lead to retroactive actions.

Ahhh. The NIT wits are at it again...

How can we line our pockets at everyone else's expense?? Perhaps we can scream we are "captive", yeeeeah, suuuuure....

Why don't we just ship their stuff for FREE??!! I doubt they'd be happy even with that...

Guess what, the shippers luckily don't get to decide what their rates are. What a concept, huh, FM?

At any rate, given the current congestion, EVERYONES rates are going up and going up A LOT. The demand outweighs the supply and unless railroads are allowed to make money by raising rates there won't be any additional capacity to move more, so those precious shippers will have a choice. Pay higher rates or truck it...if they can find a trucker that they haven't already run out of business through their predatory price cutting demands...

What goes around comes around...re-regulation won't expand capacity. It deserves no consideration in national transportation policy...

LC